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ICYMI: Corporate tax cut will provide huge boost to wages

- October 16, 2017

White House study: Corporate tax cut will provide huge boost to wages
Washington Examiner
Joseph Lawler
October 16, 2017

"President Trump's goal of lowering the corporate tax rate will boost the average family's income by $4,000 to $9,000 each year, according to a new analysis released Monday by his new economic adviser.

"Kevin Hassett, the newly-installed chairman of the Council of Economic Advisers, published a brief paper finding the corporate tax cut would provide a massive boost to household income, based on a 'conservative estimate' of the relationship between corporate tax rates around the world and wages.


"It provides academic heft to the pro-worker rationale for the centerpiece of the GOP tax reform plan, namely a reduction in the corporate tax rate from 35 percent today to 20 percent. Democrats have criticized the package as promising benefits for businesses but not for families. Hassett's paper will provide a basis for Republicans to challenge that attack.

"At the heart of Hassett's argument is the observation that, in recent years, countries with low corporate tax rates have seen higher wage gains than countries with high corporate tax rates.


"Lowering the U.S. tax rate, he argued, will limit such gaming of the tax system. And it will encourage investment in plants in equipment, because investments that are marginally profitable under today's tax code will become worthwhile if taxed less.

"Hassett calculates the 15 percent corporate rate cut could increase average household incomes from $83,143 in 2016 to between $87,520 and $92,222. Median household income -- meaning earnings for more of a typical household -- would rise from $59,039 to between $62,147 and $65,486."

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